Iran, Sanctions Lifted and Lower Oil Price Risky Business

Results of Diplomacy Offset Against Lower Oil Prices

Results of Diplomacy Offset Against Lower Oil Prices

For president Rouhani, sanctions relief as result of the P5+1 negotiations were crucial element of his political promise to improve life of Iranians. But with the lower oil price around $40, the partially lifted sanctions do not make a difference, nor will it change the 'Good Guy Bad Guy' status between president Hassan Rouhani and the supreme leader Ali Khamenei.

The only partially lifted sanctions limit trade with the US and Asia. That steers Iran initially towards Europe for unblocked assets, necessary funding and economic growth.

Africa is a key continent

Many European, Asian and a few American companies rushed into the Iranian market after the Geneva accords.

Business with Iran was promoted when multinationals from Europe and Asia committed billions to investments in long term strategic industries. Those deals signaled a new page in the history of Iran. In the mainstream media it seemed as if Iran suddenly became an acceptable business risk.

In reality, even after the Iran deal business is risky, because it is a nuclear cooperation deal which includes many circumstantial requirements. What big companies view as an acceptable business risk, still is an unacceptable short term risk.

Businesses, which view Iran as a target economy are frustrated by the absence of banking facilities. Even though Iran agreed to the stipulations that Financial institutions are still prohibited from supplying SWIFT services, Iran says the West is failing to implement its side of the deal by not providing banking and insurance provisions to facilitate trade with Iran. For example, virtually none of the 500 million pound line of credit for Iran by the UK Department for International Trade’s has been used.

Iran is a state sponsor of terrorism. Since 2008, intelligence and AML operations focused on the financial ties of Iran with the Taliban and the Hezbollah money laundering service that were and now again are a vital part of its strategy for Hezbollah and Hamas. Trade promotions and lifted financial sanctions in Europe increased that threat significantly.

For Iran and Pakistan the threat of the Khorasan Province branch is active across the whole of Afghanistan plus the adjacent parts of Pakistan, Iran and the countries in Central Asia. Al Qaeda's ISIS strategy exploits and reinforces ethnic and political divides, sow division and discord inside Iran.